SMM Morning Review – 2012/3/26 Nickel Market

SHANGHAI, Mar.26 (SMM) -- LME nickel for delivery in three months opened at USD 18,450/mt and closed at USD 18,225/mt last Friday night, down USD 194/mt, with the highest price at USD 18,600/mt and the lowest price at USD 18,144/mt. Daily trading volumes were 3,336 lots, down 163 lots. Positions were 98,829 lots, up 1,480 lots. LME nickel inventories were 97,740 mt, down 48 mt.

LME nickel prices continued to drift lower last Friday. Although LME nickel prices were temporarily boosted by China’s cut in bank requirement reserve ratio, the US February’s lower-than-expected new home sales data weighed on US equity market and LME nickel prices to hit a low a USD 18,144/mt. Finally, LME nickel prices erased partial losses but still closed at USD 18,225/mt.

The US dollar index continued to slip last week, but conditions in the euro zone were not optimistic. Government bond yields of other European countries grew significantly higher than those of Germany. The slightly improved market sentiment following implementation of European Central Bank’s (ECB) third round three-year LTRO seemed to deteriorate further, weighing on the euro to certain extent. Generally speaking, LME nickel prices were weighed down last week on negative global economic news, but LME nickel prices are expected to stabilize to certain extent on Monday as market has absorbed negative impact from these news.

SMM expects that LME nickel prices will move in the USD 18,100-18,600/mt range, and spot nickel prices will fall to the RMB 131,000-135,000/mt range on Monday.